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Autumn Statement: OBR cuts growth to -0.1% in 2012; 1.2% in 2013
by Sarah Miloudi on Dec 05, 2012 at 12:42
Growth in the UK will run at around zero in 2012 and at 1.2% in 2013, the Office for Budget Responsibility (OBR) said.
Despite the Office for National Statistics (ONS) maintaining its 1% growth estimate for 2012's third quarter, chancellor George Osborne has continued to come under pressure to generate growth and as part of today's address to parliament, the OBR reduced its growth estimate for 2012 from about 0.8% to roughly -0.1%, and for 2013 from 2% to 1.2%. In 2014 an estimate of 2% was given.
Ahead of the Autumn Statement, Osborne was set to extend his austerity measures, originally due to end in 2015 as the deficit came down, through to 2018.
Osborne was expected to push for growth via construction and infrastructure builds, and on Tuesday he announced a £5 billion measure to create new schools, roads and science projects, however this package is to be funded by cuts at Whitehall.
A reduction in the deficit was also meant to come via cuts to NHS spending, but a health service spokesperson rebutted the speculation.
Speaking to parliament Osborne said despite the gloom 'Britain is on the right track', with the deficit down by a quarter in two years.
The OBR in part backed this claim and said the deficit was falling, but warned the shock of the financial crisis would linger. GDP actually shrank by 6.3% in 2008/09, it said.
Osborne said the structural deficit in the UK had been cut by more than any other country and that he would stick with his recovery plan, though all initiatives would be balance sheet neutral.
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